The below letter was sent to energy, climate, environment, and science ministers across the main political parties.
This General Election is a massive opportunity for a new government to come in and make a difference in our fight against climate change. This is the first time we’ve gone to the polls since the setting of our legal obligation to reach economy wide net zero carbon emissions by 2050.
75% of British people think the UK government should be doing more to support renewables. We agree, and so have been thinking about what needs to be done in our industry, to allow those inside to do our bit, and complete the transition to a cleaner, decentralised energy system. Nothing we’ve suggested below requires intrusive change – they are minor changes which will deliver major benefits. If work begins immediately, we think everything could be achieved in 2020.
Our policy priorities can be broken down into eight steps, across three key areas:
Encouraging Research and Innovation
- Conduct a thorough review of our research institutions and ensure that they are all fit for purpose and aligned towards making the progress we need to achieve net-zero.
- Make energy systems data available to innovators to allow for real disruption and challenge, and ultimately drive down costs for the consumer.
- Harness the existing resources of larger industry players to engender more support for disruptors and innovators in the energy space.
- Provide Ofgem with a mandate to facilitate decarbonisation, enacting the recommendations of the National Infrastructure Commission.
- Reverse the hostile policy environment which is preventing increased deployment of renewables, storage and flexibility technologies.
Protecting and Empowering Consumers
- Empower individuals to be part of the solution. Raise standards for housing, and build energy efficient homes, equipped with solar PV and electric vehicle charge points
- Protect consumers by reforming Fuel Mix Disclosure rules and require that renewable energy certificates (REGOs) should be traded only with the power they relate to.
- Unlock the potential of smart meters and allow suppliers to provide consumers with better ways to engage with their energy, lower their bills, and expedite the transition to a flexible energy system.
75% of British people think the UK government should be doing more to support renewables. We agree and have been thinking about what needs to be done to complete the transition to a cleaner, decentralised energy system
Research & Innovation
1. Research review
We simply will not be able to achieve net zero emissions, in energy or the wider economy, without continued excellence in research and innovation. Our research institutions need to be working in a coordinated fashion. The next government should conduct a systematic review of our research institutions, to make sure that they are working in line with our national decarbonisation priorities.
2. Open data in energy
We need to make more energy systems data available to innovators to allow for real disruption and challenge, and ultimately drive down costs for the consumer. The Open Data Institute has a variety of examples where complex data systems have become more transparent to allow for innovation in transport and support large systems, like cities, to look for more efficient solutions. Flexible Futures, the joint REA and Electralink initiative which looked at distribution level data, is an excellent example of this in practice in energy, but it’s the first step on a long journey. The Energy Data Taskforce made five recommendations on how to make industry data better, and more visible. We need a government who can put this into practice, and harness data to unlock a decarbonised energy system at the lowest possible costs to the consumer.
3. Support for innovators
We have seen ‘incubator’ models succeed in the finance and technology sectors. The next phase of energy services is also built on a foundation of rapid technological development. If new energy start-ups were given access to the wealth of capital and expertise already commanded by industry insiders, we could accelerate the development and deployment of new business models and technologies.
4. Regulators with teeth
On the 11th October, the national Infrastructure Commission published their study into the UK’s regulated sectors. Their key finding was that Ofgem, Ofcom and Ofwat should have new duties to promote the achievement of net zero carbon emissions by 2050. Currently, the absence of such a mandate means that companies with an interest in clinging on to the high-carbon status quo have been able to neutralise and undermine policies which may reduce emissions but challenge their business models. Examples of this can be found across the energy sector. The scrapping of Levy Exemption Certificates (LECs), for example, means we now pay carbon taxes on renewable electricity.
This needs to change, and fast. One of the best things any new government could do to pave the way to net zero would be to follow through on the NIC’s recommendations and bring into law the duty to promote decarbonisation a key part of the Ofgem’s remit.
5. Ending the hostile policy environment
The last few years have seen more and more policy obstacles placed in the way for the technologies we need to reach net zero. The scrapping of levy exemption certificates, or LECs, means we now pay carbon taxes on renewable generation; the blocking of onshore wind stopped a national success story in its tracks; and the recent raising of VAT on solar panels means that it’s now more expensive to install some of the most efficient PV panels around. These have all conspired to damage investor confidence and slowed the deployment of vital renewable generation capacity.
Ofgem’s latest network charging policies is the most recent example of how the lack of a commitment to decarbonisation will cause harm if not urgently addressed. Ofgem’s stated aim with the Targeted Charging Review (TCR) is to ensure the costs of running the energy network are spread fairly among users. However, rather than considering the consumers of the future, the changes are set to protect existing business models. The TCR will turn dynamic behavioural signals into static, standing charges – removing the incentives for altering consumption to help relieve grid constraint, and improve efficiency. Ofgem’ own impact assessment of the reform assumes a 50% reduction in onshore wind and solar deployment. This will not deliver net zero. We are calling for the reversal of this hostile policy environment which is preventing increased deployment of renewables, storage and flexibility technologies.
Protecting and empowering consumers
6. Powering consumers to be part of the solution
An energy system fit for net zero isn’t just made up of large, transmission connected generation. We already have hundreds of thousands of homes in the UK generating power via rooftop solar. For the consumer, this is an exciting time. The future won’t just involve generating their own power, but also driving an electric vehicle and participating in V2G charging; being on a time-of use tariff and combining it with smart appliances which will make use of electricity when it is cheapest. However, we need to make sure that everybody can participate in this future, not just those who can afford to invest. All new homes should be built to high energy efficiency standards, but also with electric vehicle charging points, and where appropriate, solar panels and battery storage.
7. Protecting consumers against greenwashing
The Renewable Energy Guarantee of Origin is a scheme designed to inform consumers about the proportion of electricity that supplier’s source from renewable generation. Every certificate corresponds to one MWh of renewable power. However, these certificates can be traded separately from the power, at extraordinarily low prices. This loophole is increasingly being taken advantage of at significant scale, with suppliers claiming to offer ‘100% renewable’ tariffs, despite holding little or no contracts with renewable generators. One of the best examples was earlier this year, where Shell Energy went from 3.7% renewable to 100% renewable overnight. They could keep using the same ‘brown power,’ from coal and gas plant, and simply add the REGO certificates to make it green. We think this is misleading for consumers, not informative, as intended. However, there is a simple solution. A new government should reform Fuel Mix Disclosure rules and require that REGOs should be traded only with the power they relate to.
8. Improving engagement with energy
We recognise that the smart rollout is the way to provide consumers the opportunity to engage with the energy consumption, generation, storage and sharing in a meaningful way. However, In-Home Displays belong in 2007, and are currently delivering poor customer service experiences. Additionally, current arrangements will stymy innovation, damage the environment, and compromise the bill savings delivered by the smart meter rollout. More trials are needed to find the best ways for consumers to interact with their energy usage.